EdTech Thoughts 4/24 - 4/30
Let's wrestle for it
Hello!
I really like writing this newsletter. I’d like to find a way to spend even more of my time working on it. To do so, I am making a few changes to see if there is a path to financial sustainability from writing. They are:
Weekend Reading: is a new, free newsletter with links to EdTech Funding news, People moves, and an assortment of stories. It will arrive in your inbox on Fridays, around lunchtime, and look something like this.
Live, unrecorded interviews: Weekend Reading will occasionally have a Featured Organization. Prior to posting, I’ll offer a live, unrecorded interview with a leader from the organization for a limited audience.
The first interview will be this Wednesday (5/3) at 630pm ET, with Peter Mobbs from Five Sigma. We’ll discuss the addition of a new partner to his investing team and what the fundraising environment is like for late-stage EdTech investors. You can sign up to attend the interview here.
Paid EdTech Thoughts: This newsletter is going to transition behind a paywall. Newer subscribers will be offered an extended trial before being asked to convert so you can get a sense of the newsletter over time.
The core hypothesis driving these changes is that Links and Distribution should be free, but Analysis is worth paying for. I hope that many of you will agree with me!
With that, on to the news!
Funding / M&A / IPOs
Replit raises $100M: San Francisco-based Replit is not, strictly, an EdTech tool. The company provides a browser-based integrated development environment (IDE) to software engineers. However, the company did find its initial footing in the K12 and Higher Ed markets, where the constraints of a browser-based IDE were more of a feature than a bug.1 The company is also one of EdTech specialist investor Reach Capital’s biggest success stories (and by the way, Reach announced one of the biggest venture funds dedicated to EdTech just 2 weeks ago)
DeepHow raises $14M: Detroit-based DeepHow creates technical training videos for large industrial enterprises to onboard and upskill employees. The funding from this round will be used to invest in go-to-market efforts and experiment with adding generative AI to their product.
TinyTap raises $8.5M: Tel Aviv-based TinyTap provides a marketplace of user-generated content for children. The company, which was bought by the crypto-famous Animoca Brands last year, plans to use this round of funding to do blockchain things. The implementation of said blockchain things is sort of vague and mysterious, but, as near as I can tell, provides course creators with an advance + splits residuals between creators and NFT holders.2
Summer raises $6M: New York-based Summer helps student loan borrowers understand and manage their loan payments. The company will use this round of funding to expand their enterprise offering, which helps organizations like Fidelity and the American Federation of Teachers offer loan-payments-as-a-benefit to their employees/constituents.
HerKey raises $4M: Bengaluru-based HerKey is a platform for supporting female professionals in India. The company already serves 3.5M individuals and 10K+ companies and will use this round of funding to continue scaling their go-to-market efforts.
BPEA EQT acquired IMG Academy for $1.25B: Bradenton-based IMG Academy started its life as a high school for elite tennis players. Over time, the school expanded to include most of the other American sports with high-revenue professional leagues. This made IMG’s previous owner, the sports and talent agency Endeavor, a fairly natural home. It’s curious to me that Endeavor would give up unilateral control over this talent pipeline. It’s possible that Endeavor liked BPEA’s plans for global expansion, but not enough to finance it themselves. Or the margins are better on wrestling.
iLearningEngine to go public via SPAC: There was a time, not long ago, when SPACS were the future. I once likened them to a Lil Jon < > LMFAO collab. However, I think Varsity Tutors was the only EdTech companies to get in on the action before the SPAC window (mostly) closed.3 Arlington-based iLearningEngine, which provides training content to corporations, is set to double that number if this deal goes through.
EdTech accelerator LearnLaunch’s latest cohort is starting soon: Not a funding announcement, but potentially leading to many announcements in the future: LearnLaunch announced applications are open for its latest program
Looking for a full list of companies that have raised venture funding this year? Upgrade to paid for access to the EdTech Funding and M&A database
Story
ChatGPT taking jobs from Kenyan Ghostwriters4
I am a fan of knick-knacks and keep several near my desk at home. One is a bookmark. On the bookmark, Dilbert’s boss points at him and says, “Change is good, you go first.”
For those who are less familiar with Dilbert, the lesson here is that while there are a lot of champions for Change, it is often much easier to live with the status quo.
The status quo here is the Cheating Wars. The Cheating Wars have been great for business - students spend billions of dollars annually on shirking their scholarly responsibilities and schools spend billions of dollars per year on sometimes-disturbingly sophisticated student tracking software.
In the above-linked article, we learn about how ChatGPT is upsetting the balance of financial power in this equation. Students are turning to it instead of contract essay writers in Kenya, halving (or more) the Kenyans’ income.
I empathize with anyone who suffers a loss of income, but I feel like it is fair to draw a line in the sand when the Cheating Wars turn into defending the status quo right to the continued employment of outsourced essay writers?
I am exhausted by all the efforts to ban | or | contain | ChatGPT. I prefer the abundance agenda. ChatGPT is magical. It has the ability to empower every educator to be their own software developer and/or assessment designer. It may even mean the end of having to write recommendation letters!
That does not mean we should charge recklessly into the AI-enabled future - thorny questions remain. What are the implications of a student who learns best from a gendered voice of a specific race? Does your answer change when you apply your logic to entire populations of students?
I am just asking for a little more optimism to balance out the Cheating Wars doom cycle.
Asks
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Links
Most clicked link from last week: The Science of Reading
The US Department of Agriculture as the lender of last resort to rural universities
The USDA is, perhaps surprisingly, one of the most important funders of education and education-related activities in the US. In addition to the hundreds of millions of dollars in loans the department is lending to rural colleges and universities, it also supports the nationwide K12 school lunch program, which took on outsize importance during COVID.
Whether the USDA should be shouldering this load is a fair question, but one that deserves more than a gut reaction. It is possible that USDA loans to universities are delaying the inevitable failure of a number of institutions. It is also possible that these loans are one of the last drivers of jobs and economic activity in areas that start to look pretty bleak without education and healthcare.
$800M, all dressed up with nowhere to go
You could kind of feel this piece coming after EdSurge and Higher Ed Dive tried to examine the plan for Harvard and MIT’s post-edX plan - named the Axim Collaborative - and ended up with mostly jargon.
Inside Higher Ed did not get much further in their questions to Axim, but did get some great quotes and details from industry folks. A key detail I didn’t know - there were schools outside of Harvard and MIT that made financial contributions to edX, including $5M from UT Austin. But the payout from the edX acquisition has been exclusively reserved for the Axim Collaborative, apparently without input from these schools.
“What became increasingly clear to me over the last several months, as I spoke to dozens of politicians, political consultants, union leaders, parent activists and education scholars about the convulsions in American education, is that it’s no longer possible to separate education from politics, and that public schools are more vulnerable than they’ve ever been.”
It is becoming similarly clear to me that Education - and, thus, EdTech - is going to be one of the defining topics of the 2024 US election cycle. Transparently, I’m not entirely sure how I want to cover this.
I am confident that this cycle is going to have an impact on the types of EdTech companies that thrive over the next 4 years, so I am going to keep tracking it and relaying the stories and trends that are breaking through.
In this case, former Secretary of State and CIA Director Mike Pompeo called American Federation of Teachers leader Randi Weingarten “the most dangerous person in the world.”
Question of the Week
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Results of last week’s poll:
Ed Tech Thoughts is a short ( ~ 5 mins), weekly overview of the top stories in EdTech, with a few (hopefully interesting) gut reactions attached. If you enjoyed this edition, I hope you will subscribe and/or forward to your friends!
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Explaining why many software engineers would object to a browser-based development environment (especially in 2016, when Replit was just getting started) is beyond the scope of this newsletter. The point is that the limitations of this approach were helpful for teaching students how to code.
Without going too deep down the rabbit hole, this is something that could probably be solved with simple Digital Rights Management (DRM) agreements, as have been common in the publishing industry for decades. Authors, particularly aging musicians, sell all or portions of their residuals all the time.
A company called zSpace also agreed to go public via SPAC last March, but it appears something may have gone wrong with the deal.
As a sort of weird twist to this story, the major financial sponsor of the publication that wrote this story - Rest of World - is former Google CEO Eric Schmidt’s daughter, Sophie Schmidt.
No option for “continue to make vague statements every two years”!